Former investment banker overhauls TIAA-CREF
From the front page of today's WSJ: For nearly eight decades, TIAA-CREF was the big man on campus. It had a virtual monopoly on managing retirement plans for millions of college educators. Now it's being schooled by Wall Street in how to compete in the field it invented.
TIAA-CREF's share of its main market -- managing retirement funds for employees of universities -- has tumbled to 70% from essentially 100% in about a decade. The problem: While rivals innovated and clients demanded new services, TIAA-CREF's ways of doing business seemed frozen in time.
For the past three years, the task of reviving its fortunes has fallen to an unlikely leader for a firm founded as a nonprofit and steeped in the academic world. Former investment banker Herbert Allison, once a contender for the top post at Merrill Lynch & Co., arrived in late 2002 to transform the stodgy organization and go head- to-head with financial powerhouses such as Fidelity Investments, Charles Schwab & Co. and AIG Valic, the retirement-plan arm of insurer American International Group Inc.
His plans at TIAA-CREF are ambitious. Mr. Allison, 62 years old, is launching an online brokerage arm. He is replacing a computer system so antiquated it's hard to find programmers to update it. (Mr. Allison jokes that it was "programmed in Aramaic.") To focus on the core business, he has dropped his predecessor's plan to market more to non- academics. In the biggest departure, he is hiring 500 financial advisers to persuade retiring university employees to keep their money at TIAA-CREF rather than roll it into a competitor's shop.
But missteps and controversies have hobbled the overhaul...read the whole article HERE
TIAA-CREF's share of its main market -- managing retirement funds for employees of universities -- has tumbled to 70% from essentially 100% in about a decade. The problem: While rivals innovated and clients demanded new services, TIAA-CREF's ways of doing business seemed frozen in time.
For the past three years, the task of reviving its fortunes has fallen to an unlikely leader for a firm founded as a nonprofit and steeped in the academic world. Former investment banker Herbert Allison, once a contender for the top post at Merrill Lynch & Co., arrived in late 2002 to transform the stodgy organization and go head- to-head with financial powerhouses such as Fidelity Investments, Charles Schwab & Co. and AIG Valic, the retirement-plan arm of insurer American International Group Inc.
His plans at TIAA-CREF are ambitious. Mr. Allison, 62 years old, is launching an online brokerage arm. He is replacing a computer system so antiquated it's hard to find programmers to update it. (Mr. Allison jokes that it was "programmed in Aramaic.") To focus on the core business, he has dropped his predecessor's plan to market more to non- academics. In the biggest departure, he is hiring 500 financial advisers to persuade retiring university employees to keep their money at TIAA-CREF rather than roll it into a competitor's shop.
But missteps and controversies have hobbled the overhaul...read the whole article HERE
posted by Celia at 1:42 PM
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